Destruction, creation and survival : evidence from the evolution of firms in an emerging market, in a post-crisis context

Abstract

We use a panel database of the universe of firms constructed from Chilean IRS, to study the evolution of firms, in a sense of destruction, creation and survival. As expected, larger and more productive firms are less likely to be destroyed; and (also as expected) they are less likely to be created than smaller and less productive firms. However, when we analyze young firms, the most succeded are those who made an important investment in his first year of life, and the productivity will be relevant depending of the sector. So there’s some evidence about the entrepreneurship and the stock of capital they make and how is that related with his relevance in an emerging market. We have shown that “financial dependence” has different meaning for smaller firms, as reflected in a significant difference in sign of the corresponding parameter. For them it is an indicator of ”financial constraint” and acts in our regressions as a predictor of firm destruction, also a stronger predictor of firm creation smaller firms, acting like a “financial access”. but does not affect the chances of survive.